In this policy statement (PS) we summarise and give response feedback to CP12/38 – Mutuality and with-profits funds: a way forward.
Why are we publishing this policy statement?
In December 2012 the FSA consulted (CP12/38[1]) on the issue of mutual with-profit life assurance providers (mutuals) which are facing declining levels of with-profits business, or which already have with-profits funds in run-off.
This policy statement confirms that, taking into account comments received to CP12/38, we will proceed with the proposed option of seeking a rule modification which would allow mutuals with a viable business plan to continue after their with-profits funds have run-off. It recognises that the method outlined is one of a number of options with-profits mutuals could use to continue operating, and also sets out some principles for firms seeking an alternative.
Who should read this paper?
This guidance will affect:
- with-profits mutuals
- with-profits policyholders of mutuals
- non-profit policyholders of mutuals
- members of mutuals
Next steps
Firms should now consider if this guidance is appropriate to them, and if so follow the processes explained in this PS.
The PRA is making a separate announcement on this subject. To ensure a consistent approach, we have been in regular dialogue throughout the development of this PS and the Statement from the PRA.